It has sped up the process and made it more democratic. And changed what companies are looking for.
By Emily Glazer – The Wall Street Journal.
Companies are recruiting new leaders again—and they’re reimagining the way they do it.
The pandemic has transformed the process of recruiting CEOs and other top executives. For one thing, it’s getting faster, as virtual interviews have cut the time it takes to interview and hire to roughly four to eight weeks, rather than being drawn out over months of time-heavy trips.
But the changes go well beyond speed. Some recruiters say the virtual process also has broadened the applicant pool, given more people inside the company a chance to speak with applicants and generally broken down formality in interviews.
Companies also are giving priority to different values in their new leaders, recruiters and directors say. The pandemic created all sorts of disruption, from technology to corporate culture and a greater focus on diversity. As companies seek executives who can navigate this environment, some are looking for new qualities, such as the ability to speak to a broad audience of stakeholders.
“There’s a very public voice that a CEO carries now,” says Tierney Remick, vice chairman and co-leader of board and CEO services at executive-search firm Korn Ferry. “There is increased demand for their voice across many constituencies, including employees but also customers.”
It’s too early to say just how long these changes will last, but many of them seem to be here to stay. Here’s a closer look at five of the biggest trends that board members, recruiters and senior executives are seeing:
1. A Wave of Turnover
Executive turnover had been surging in the years before Covid-19—but the pandemic put a halt to the trend. It made sense: During the early days of Covid-19, many companies wanted to maintain stability in their top ranks as they worked through a number of pandemic-related uncertainties. CEO turnovers, as a result, dropped 61% in the U.S. in the second half of 2020 from a near-record level in the year-earlier period, according to a report by Bain and Spencer Stuart.
Now, the unofficial freeze is lifting. The report predicts that CEO turnovers in 2022 will rise as much as 30%.
Board members and recruiters say the changes are driven by a number of factors: CEOs are underperforming; the leadership team is ready to activate a succession plan after putting retirement on hold during the pandemic; and CEOs’ skill sets increasingly don’t match the company’s newer priorities.
“There’s a category of people who didn’t lead well through this crisis, and boards are going to step up and say, ‘It’s time,’” says Bonnie Gwin, a vice chairman at executive-search and leadership-advisory firm Heidrick & Struggles International Inc. who co-leads its global CEO and board-of-directors practice.
2. Hiring Is Getting Faster
Virtual interviews are also speeding up the entire interview process, since initial rounds—and sometimes the full process—are often happening by video call instead of in person.
Pre-pandemic, it could easily take several weeks to set up in-person interviews of a CEO candidate with different board members, due to different travel schedules, says John Wood, a vice chairman at Heidrick & Struggles who works on CEO and board searches. Now, candidates are able to more quickly speak with relevant individuals on the front end of the interview—and sometimes have access to even more people.
“People are able to find an hour or two to have a meeting or a call,” says Stephen Sadove, a board member at Aramark, Colgate-Palmolive Co. , Movado Group Inc. and Park Hotels & Resorts Inc., who has been involved in several C-suite hiring processes during the pandemic.
By the final round with CEOs, though, many companies prefer to meet candidates in person.
“The idea is that this is such a critical decision, it just shouldn’t be done virtually,” says Paul Winum, co-head of board and CEO services at RHR International, who says that during three recent CEO succession engagements he worked on, the directors arranged to have in-person meetings for their final choice.
During much of the pandemic, says Lauren Hobart, who became CEO of Dick’s Sporting Goods Inc. in February 2021, the retailer had been conducting interviews virtually. But, more recently, as people are vaccinated and local rules on gathering loosen, Ms. Hobart says, the company has eased its policies for the discussions.
“I do think it’s different now,” she says. “So, we’ve been trying to see people face to face for final-round interviews.”
3. Democratizing the Process
As companies become more comfortable with virtual interviews, technology is allowing them to shed some old habits.
For instance, Ms. Gwin of Heidrick & Struggles says virtual interviews have broadened the candidate pool. Some companies are taking more chances by meeting people earlier in their careers whom they might not have considered beforehand, since initial virtual interviews may last 45 or 60 minutes—and require no commitment of travel time. If the meetings occurred in person, it could involve a full day of travel for both sides.
“It’s opened the aperture a little bit,” Ms. Gwin says, since companies might look at newer types of candidates and surprise themselves. She adds that a newer candidate may bring “a little less on paper but has fabulous things to offer.”
The ease of virtual interviews also makes it possible for candidates to speak to a lot more people at the hiring company. Typically, candidates may only meet with some board members or may not have access to many on the management team, executives, recruiters and board members say.
Technology executive Peggy Johnson says the virtual process allowed her to speak with far more people when she interviewed to become CEO of spatial-computing firm Magic Leap Inc. in 2020. When Ms. Johnson, who was named CEO in September 2020, started virtual interviews, she says, she didn’t know anybody on the board besides the outgoing CEO. “It was a little daunting,” she says.
But since travel schedules weren’t an issue, Ms. Johnson says, she talked to all the board members and a number of executives on Magic Leap’s management team to get an understanding of the company. It also allowed her to share her relevant experience with a wider range of people: Magic Leap was moving to enterprise technology, an area she has worked in, and she focused on how augmented reality could be used in healthcare, the public sector and manufacturing.
Virtual interviewing also changes the power dynamics of an interview. On video calls, everybody is the same-size square, and there isn’t the same type of jockeying over where someone sits around the table, says Jim Citrin, who leads Spencer Stuart’s North American CEO practice and co-wrote a book about managing a remote workforce, “Leading at a Distance.”
Ms. Gwin says video interviews can also be more intimate and offer a different way to get to know candidates, since a candidate’s dog may walk into the room, a baby might cry, or the interviewers can see which books or other items are displayed on their shelves. On the flip side, she says, recruiters and board members miss other nuances, like how a candidate greets the receptionist or whether they acknowledge the person who brings them coffee.
Institutional investors, board members and other stakeholders were calling for more diversity in the C-suite before 2020. But those issues came to the forefront even more last year, following racial-justice protests across the country and a sharper focus on diversity and inclusion across the business community. For instance, companies including ride-sharing firm Uber Technologies Inc., consulting firm Ernst & Young and coffee chain Starbucks Corp. are calling for more diverse hiring in top management and increasingly tying that to executives’ compensation.
“We’re at a moment in time when companies aren’t going to tolerate not having a diverse slate; it truly puts them at risk,” says Ayana Parsons, who leads Korn Ferry’s board and CEO inclusion work. The firm says since it acquired Global Novations, a consulting firm focused on diversity, equity and inclusion, in 2012, its DE&I practice’s annualized new business has increased threefold.
Ms. Parsons says that in conversations with board members and during C-suite searches she’s working on, clients are asking for a more diverse slate of candidates.
A number of independent executive-search groups, such as the Monarchs Collective and Take Your Seat, have also sprung up in the past year in efforts to diversify boards, establish networks of experienced professionals, and partner with larger recruiters and companies. That has changed the broader network of people who are tapped for board roles and often extends to the C-suite, too, according to executives, board members and recruiters.
Jerusha Stewart, CEO at Take Your Seat, which works to diversify boardrooms, says that as its directory of Black professionals grows, the group is seeing interest in expanding opportunities beyond board seats. For instance, it is working on CEO placements for a consumer-goods company and at the nonprofit B Lab, she says.
“Companies are being increasingly creative in widening the aperture when looking for senior diverse hires,” she says.
5. Asking Different Questions
A number of factors—including the coronavirus, a partially remote workforce and a wider call for so-called stakeholder capitalism—have expanded the role of the CEO to a leader focused on more than running a profitable business. Now many are expected to take a stand on political or social issues. And board members, executives and recruiters say they’re looking at a newer set of issues—such as candidates’ empathy, their ability to communicate with a range of stakeholders and a focus on workforce well-being—that weren’t in the foreground a few years ago.
“With the whole issues of the last year, that’s even more important—communicating the company’s vision, the company’s values, to the public is critical, and you would look for that,” says Charles Elson, a University of Delaware professor who focuses on issues including corporate governance. “The idea is being thoughtful and understanding of others and others’ viewpoints and feelings because to maintain a workforce in this environment you had to have sensitivity to others. And that explains a lot of the salary cuts and actions that were taken.”
That means recruiters and board members are asking different questions when they interview C-suite candidates. Mr. Elson, who has also served on corporate boards, says newer questions may be, “How do you bring a divergent group of people together?” or “Will your employees come back to the office?”
Executive coach David Dotlich says he has talked with boards who say current and future CEOs need to have a commitment to understanding that the corporate system needs to be changed, since minority-group members and others haven’t fully been included in the past and need to be treated fairly.
“If a CEO doesn’t have a basic understanding of that, at least in big companies, they’re probably not on the list anymore,” he says. Candidates, he adds, have to have a point of view on diversity and inclusion, not necessarily a quick fix, but an understanding of how it is part of the strategy.
The efforts extend to generational issues. Dale E. Jones, CEO of executive-search firm Diversified Search Group LLC, says he now talks to C-suite candidates about how the workforce has evolved, noting that by 2025, 75% of the workforce will be millennials. He asks questions like: “What do they think of leading a different organization where the priorities have changed from baby boomers?” Mr. Jones says it is a reminder that the organization they will run is different than the ones they have worked in. “It’s not only a generational change but also changes in technology, changes in values and lifestyles.”
Often, leaders face more questions these days focused on topics including environmental, social and governance, or ESG, factors; what the candidates’ views are on DE&I; and how digitization has changed the way people operate, Mr. Jones and others say.
Nick Jeffery, CEO of Frontier Communications Corp., says that when he was recently interviewed for that job, board members and others asked about his beliefs regarding diversity and inclusion and specific evidence to support those beliefs, such as how he’s created a diverse and inclusive environment in prior roles.
Mr. Dotlich, whose executive-coaching firm is owned by Korn Ferry, says employees’ mental and physical well-being has moved up as an issue given the coronavirus pandemic. “In the past, well-being was a ‘nice to have,’” he says. “Now, it’s the center of recruiting and talent.”
Mr. Sadove, the board member, says skill sets will vary by industry, and the issues that are relevant today may continue to evolve. While he says there’s no single question he asks, he tries to get a sense of how candidates are viewed by their workers, peers, subordinates and bosses; their value sets; and their life and business experiences.
“You need someone who is able to look ahead out of the windshield, not just directly in front of them, but where the car, the ship, is going,” he says.
Featured article licensed from the Wall Street Journal.